Majority
p. 458Henry B. Hart v. Stephen Potter. (Before Dueb, Hoffman and Slosson, J.J.) April Term, 1855.
Headnote
'When it appears that a promissory note, made for the accommodation of the payee, ■was obtained from the payee hy fraud, the holder is hound to prove that if was transferred to him for value, and before its maturity. He is not, however, hound to prove in addition that he had no notice of the fraud when the note was transferred to him, hut the burden of proving facts sufficient to charge him with' notice, rests upon the defendant.Judgment for the plaintiff, with costs.
This was an action by tbe plaintiff, as endorsee, against tbe defendant, as maker of a promissory note for $438.40.
Tbe complaint stated tbat tbe note was dated on tbe 30tb of October, 1852, was payable six months after date .to tbe order of one James D. Potter, and by bim was endorsed to tbe plaintiff. It averred demand and refusal of payment, and demanded judgment for tbe amount of tbe note, witb interest.
Tbe answer.of tbe defendant admitted tbe making of tbe note, but alleged tbat it was made for tbe accommodation of tbe payee, James D. Potter, wbo promised to pay it at its maturity, — tbat while it was in bis bands, one Felix ISTewfielder sold and delivered to bim fifty baskets of champagne, and four thousand segars, and at tbe time of such sale-and delivery, represented to him," and warranted tbat tbe champagne was genuine imported-champagne,- and tbe segars genuine Spanish segars, and tbat tbe said Potter, relying upon such representation and warranty, bad transferred tbe note to'ISTewfielder, in part payment of the champagne and segars so purchased and delivered. Tbat tbe representation and warranty so made by ISTewfielder, were wholly false, and known to be so by bim when made, both tbe champagne and tbe segars being spurious and wholly worthless articles. Tbe answer also alleged, tbat tbe note bad not been transferred by ISTewfielder to tbe plaintiff for any consideration, but tbat it still belonged to ISTewfielder, for whose benefit tbe action was prosecuted.
p. 459
The cause was tried before Bosworth, J., and a jury, on tbe 15tb of December, 1854.
Upon tbe trial, tbe note baying been produced and read in evidence, and tbe plaintiff baying rested, evidence was given on tbe part of tbe defendant, tending to establish tbe defence set up in tbe answer, and evidence was then given on tbe part of tbe plaintiff, tending to prove tbat tbe note bad been received by bim from Newfielder, before its maturity, in payment for a quantity of segars sold and delivered by bim to Newfielder. No facts or circumstances were proved, or appeared in evidence, tending to charge tbe plaintiff with notiee of tbe fraud, by which Newfielder bad obtained possession of tbe note.
Tbe testimony being closed, tbe Judge charged tbe jury as follows:
“ Tbe making of tbe note is admitted; and tbe first question of fact to be determined is, whether Newfielder obtained the note from James D. Potter by fraud. If you shall find tbat be did, tbe defendant can make any defence in this action tbat be could have made if Newfielder bad continued to own tbe note, and this action was in bis name, and for bis benefit, unless you are satisfied tbat tbe plaintiff’ took it before maturity and for value, and without notice of the fraud.
“ If you should find tbe question of fraud in favor of tbe defendant, tbe next question is, is tbe plaintiff a bond fide bolder of tbe note, taking it before it came due ? If you should find tbat tbe plaintiff became owner and was possessed of tbe note before its maturity, tbat be paid value for it, and took it without any notice of tbe fraud, be is entitled to recover tbe amount of tbe note and interest.
“ If tbe plaintiff proves tbat tbe note was transferred to him in tbe ordinary course of business, before its maturity, and for value, be is entitled to recover, unless tbe evidence given satisfies a jury, tbat be took it with notice of frauds or other defects, which could have prevented a recovery upon it by tbe person from whom be took it. If tbe defendant relies upon tbe fact of tbe plaintiff’s having notice of tbe fraud at tbe time be took tbe note, tbe burden of proof, after tbe plaintiff has shown tbat be took it before maturity, and for value, is upon tbe defendant. If the evidence as to tbe circumstances under which tbe plaintiff took
p. 460
the note, satisfies the jury that the plaintiff had notice of the fraud when he took it,'that-is enough to entitle the defendant to a verdict. But if it does not, the plaintiff is not hound to prove directly and affirmatively that he had no notice, but the defendant must show that he had such notice. If you find the question .of fraud in favor of the defendant, he will be entitled to a verdict, unless you also find that the note was transferred to the plaintiff before it was due, and for value, and without notice of the fraud, or of any circumstances which would ordinarily induce a person to suspect, that it had been fraudulently obtained by New-fielder.
“In the latter event, you will find in favor of the plaintiff for the amount of the note and interest.”
And the counsel for the defendant then and there excepted to that part of the charge in which it states that if the defendant relies upon the fact of the plaintiff’s having notice of the fraud at the time he took the note, the burden of proof after the plaintiff has shown he took it before maturity and for value, is upon the defendant. The counsel called upon the court to charge the jury that the plaintiff was, under the circumstances above set forth, bound to give 'some evidence to satisfy the jury that he had no notice of the fraud when he took the note.
The court declined to charge, otherwise than above set forth, and the defendant then and there excepted.
The jury, under the charge of the court, found a verdict for the plaintiff for $482⅛⅛ dollars damages, subject to the opinion of the court on a case to be made to be heard in the first instance at General Term, with power in the court to dismiss the complaint in case they should adjudge the cause of action not sustained by the testimony.
O. P. Schermerhom, for the plaintiff,
moved for judgment on the verdict.
JS. Wheaton, for the defendant,
insisted that the court, according to the power reserved, ought to dismiss the complaint.
By the COURT.
The only question that we are required to consider is, whether the proof given by the plaintiff
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■upon the trial 'was sufficient to justify the submission of tbe case to tbe determination of tbe jury. If tbe complaint ought to baye been dismissed, we bare power to dismiss it now, and tbat power it will be our duty to exercise.
In order to meet tbe defence, tbat Newfielder bad obtained tbe note from tbe maker by fraud, tbe plaintiff was • bound to prove tbat it was delivered to bim for value, and before its maturity. Tbat it was passed into bis bands before its maturity was clearly proved, and altbougb tbe fact tbat be gave value for it was not conclusively proved, tbe proof was quite sufficient to sustain tbe verdict. Tbe Judge would certainly bave erred bad be withdrawn tbe question from tbe jury.
Proof was therefore given of all tbe facts tbat, in order to establish bis title and repel tbe defence of fraud, tbe plaintiff was bound to prove. It is a great mistake to suppose tbat be was bound to prove, in addition, tbat be bad no notice of tbe fraud. He was not bound to prove a negative. Tbe burden of proving facts sufficient to charge bim with notice rested on tbe defendant, and not a particle of evidence to justify tbe imputation was given.
We do not understand tbat tbe Judge gave a positive direction to tbe jury to find a verdict for tbe plaintiff.
Tbe questions of fact which it was their province to determine were properly submitted, and tbe verdict which they rendered must be regarded as adverse.
We cannot say tbat it is a verdict, without or against evidence, and tbe plaintiff is therefore entitled to judgment.